We all know that auto insurance fraud is a serious problem in Canada – it costs honest customers between $100 and $150 in additional premiums each year. To bring greater awareness to this issue, Aviva Insurance launched an investigation and released its findings along with undercover video footage which can be viewed by clicking on the link at the end of this article.
What you need to know about this investigation:
Aviva’s Fraud Management department carried out a year-long undercover investigation to understand the extent of auto repair fraud in the insurance industry. Fraud and consumer abuse have been prevalent in this sector for years and contribute heavily to increased auto insurance premiums. Here’s what they did:
- Aviva purchased 10 new vehicles and used them to simulate collisions. The vehicles were damaged deliberately and examined by auto experts and engineers before being positioned on provincial highways across the Greater Toronto Area.
- Undercover investigators posing as drivers were outfitted with hidden audio and video recording devices to capture conversations with tow truck drivers and auto body shop employees. Each vehicle was equipped with hidden video cameras.
- After repairs were completed, the vehicles underwent expert examination and lab testing to determine what repairs were done and what parts were used by the auto body shops.
- Then, Aviva received invoices from the auto body shops for each repaired vehicle.
Here’s what they found:
- Nine out of the 10 cases contained evidence of potential fraud.
- On average, 57% of the total repair costs billed to Aviva were fraudulent.
- Multiple instances of deliberate additional damage by auto body shop personnel were captured on video.
- In most cases, auto body shops billed for new parts but installed used parts, or did not replace the parts at all.
- Invoices were sent to Aviva for towing and storage services that did not occur.
- Only one auto body shop provided an accurate appraisal of damages and completed repairs as indicated on the invoice.
- There were instances of customer abuse including discouraging the use of Aviva’s accredited auto body shops, towing a vehicle without proper permission and requesting a signature for a blank work order.
- Through this investigation Aviva estimates that auto repair fraud across Ontario costs approximately $547 million annually.
To watch a video summary of the investigation, click here.
What can be done:
Aviva has recommended a five-point action plan from the government to fight fraud which includes:
- Banning referral fees to take unnecessary cash out of the system (these fees benefit third party suppliers but not consumers).
- Prohibiting blank work orders to ban any supplier from asking consumers to sign them.
- Allowing discounts to customers who agree to use an insurer’s accredited repair network.
- Forcing insurers to report all identified fraud and investigation outcomes so that data is shared.
- Increasing penalties for suppliers of goods and services to insurance claims who abuse consumers or defraud insurers
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